A 'bumpy ride' before quotas go

Washington — With the last batch of quota restrictions set to disappear in less than 13 months, U.S. suppliers probably expected to find themselves preparing to take advantage of — or protect themselves from — the trove of foreign products that will become available to the market on Jan. 1, 2005.

Instead, 2004 promises a messy and complicated run-up to 2005. Already, suppliers at home and abroad are beset with challenges. Higher cotton prices have prompted overseas manufacturers to walk away from orders on some big-volume, low-cost goods originally scheduled to hit stores in late winter/early spring. At the same time, overseas producers are fretting that next year's finite quota limits will fill up well before 2004 reaches its close. Then there are the vagaries attending an election year, with the collapse of U.S. manufacturing jobs and the ascent of Chinese imports emerging as potentially potent campaign issues. In all, the industry faces a bumpy ride to 2005.

"The environment is changing on many fronts," said Bob Dale, president, bed and bath, WestPoint Stevens. "The energy that will be required next year on some of these issues [by retailers and suppliers] is not going to suddenly go away in '05." Ironically, the final year for quota will also be the one in which there may be insufficient quota available to meet U.S. demands for high-volume home textiles products. The major foreign suppliers of volume textiles to the U.S. — China, India and Pakistan — have already borrowed against 2004 quota to fill this year's orders for cotton sheets and terry towels. India and Pakistan have also borrowed against quota for cotton pillowcases.

Will quotas disappear as planned — and if they do, will duties rise up to replace them? Some overseas manufacturers, especially in China, have their doubts. The rising chorus of anti-trade sentiment is casting an uncertain shadow over the necklace of global trading alliances as America swings into an election year. But sheets, towels and other major home textiles categories won't appear on petitions anytime soon.